10/30/2015 Russia Sanctions Matthew S. Borman Deputy Assistant Secretary for Export Administration Eileen Albanese Director, Office of National Security and Technology Transfer Controls Office of Foreign Assets Control Brian O'Toole Sean Kane • The United States has implemented sanctions on Russia as a result of Russia’s destabilization in Ukraine and continued occupation of Crimea • Commerce and Treasury have implemented a range of Russia sanctions • The United States developed its sanctions in close coordination with the European Union and other countries 2 1 10/30/2015 Executive Orders Executive Orders for Russia sanctions Executive Order 13660 (79 FR 13493), Blocking Property of Certain Persons Contributing to the Situation in Ukraine, issued by President on March 6, 2014. Executive Order 13661 (79 FR 15533), Blocking Property of Additional Persons Contributing to the Situation in Ukraine, issued by President on March 16, 2014. Executive Order 13662 (79 FR 16169), Blocking Property of Additional Persons Contributing to the Situation in Ukraine, issued by President on March 20, 2014. Executive Order 13685 (79 FR 77357), Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to the Crimea Region of Ukraine, issued by President on December 19, 2014. 3 Russia Sanctions • New or expanded EAR requirements – Oligarch companies and expropriated Crimea property • Entity List – Industry sector sanctions • Energy – § 746.5 and Entity List • Defense sector – expanded § 744.21 to add Russia military end uses and end users and Entity List – Crimea region of Ukraine • Section 746.6 to impose very restrictive requirements • Entity List 4 2 10/30/2015 Energy Sector • License required (§ 746.5 – Russian Industry Sector Sanctions) when you know that the item will be used directly or indirectly in exploration for, or production of, oil or gas in Russian: (1) deepwater (greater than 500 feet); (2) Arctic offshore locations; or (3) shale formations in Russia, or are unable to determine whether the item will be used in such projects • Includes a “knowledge” requirement, but also applies if unable to determine. Therefore, if you have an item that is subject to § 746.5 destined for Russia, this section should be reviewed carefully • Item scope of § 746.5 is limited to 8 ECCNs and Schedule B numbers identified in Supplement No. 2 to part 746 5 Energy Sector • License review policy for § 746.5 – Presumption of denial when for use directly or indirectly for: • exploration or production from deepwater (greater than 500 feet), • Arctic offshore, or • shale projects in Russia that have the potential to produce oil 6 3 10/30/2015 Energy Sector • Entity List – Subject to license requirement applying to all items subject to the EAR • License requirement applies only to transactions involving the three types of prohibited projects in § 746.5 – Yuzhno-Kirinskoye Field in the Sea of Okhotsk • Subject to license requirement applying to all items subject to the EAR – Presumption of denial for license applications involving the three types of prohibited projects in § 746.5 7 Defense Sector • License Requirements – Russia added to § 744.21 • Export, reexport, or transfer (in-country) of certain items (listed in Supplement No. 2 to part 744) if for a “military end use” or “military end user” – Entity List • All items subject to EAR 8 4 10/30/2015 Defense Sector • Licensing Policy – Denial for • 600 series items • Military, security, or intelligence service end uses or end users 9 Crimea region of Ukraine • License Requirement (§ 746.6 Crimea region of Ukraine) – All items subject to the EAR, other than food and medicine designated as EAR99 and software necessary to enable exchange of personal communications over Internet to Crimea region of Ukraine – Exports and reexports to Crimea region of Ukraine and transfers within Crimea region of Ukraine 10 5 10/30/2015 Crimea region of Ukraine • License Review Policy – Presumption of denial, except for items authorized under OFAC Ukraine-Related General License (GL) No. 4, which will be reviewed on a case-by-case basis • Medical devices, medical supplies and agricultural commodities are the items that may be within the scope of GL 4 that are eligible for case-by-case review under EAR. Certain EAR license exceptions, such as EAR License Exception GFT for humanitarian donations may also authorize some items within scope of GL 4 • EAR99 food and medicine are also within GL 4, but are outside the EAR license requirements – No license exceptions, except those specified in § 746.6(c), available 11 Crimea region of Ukraine De minimis and Direct Product Rule • No changes to the EAR de minimis or direct product rule provisions • The 25% de minimis rule applies to reexports to Crimea region of Ukraine – Include part 746 license requirements for Crimea region of Ukraine in identifying controlled U.S. origin content in de minimis calculation • Country Groups for Ukraine used for determining direct product rule – D:1 is used to determine if a direct product to be reexported to Crimea region of Ukraine is subject to the EAR 12 6 10/30/2015 Russia Sanctions • BIS’s website includes FAQs for Russia Sanctions related to Ukraine: – http://www.bis.doc.gov/index.php/policy- guidance/faqs?view=category&id=114#subcat150 • OFAC’s website includes various information on the Russia sanctions related to Ukraine: – http://www.treasury.gov/resource- center/sanctions/Programs/Pages/ukraine.aspx 13 7 .